Few people would consider Rockford, Michigan a rural area, yet Rockford, despite being a stone’s throw from Grand Rapids, is eligible for one of the country’s most preferential no money down loan programs for those who qualify. Guild Mortgage has helped many rural Michigan residents benefit from this outstanding homeowner stimulus program.
What are USDA Rural Development Loans?
USDA home loan programs are primarily designed to help lower income individuals or households purchase homes in rural areas and are one of the only true “No Money Down” currently available to those who are not veterans. USDA Rural Development funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. Guild Mortgage Inlanta Michigan is expert at helping qualified families in suburban and rural locations through the USDA mortgage process.
Eligibility Criteria
Eligibility for the USDA Rural development loan program is dependent upon income and property location. In Michigan, buyers and properties must meet the Michigan State Housing Development Authority qualifications. These include sale price, income limit, first-time homebuyer eligibility guidelines, and location requirements. The property must also be a single family, owner-occupied house. The term of the loan is a 30 yr. fixed rate mortgage. Applicants for USDA loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, USDA applicants must have reasonable credit histories.
Benefits of USDA Rural Development Loans
For eligible suburban and rural home buyers, this program boasts a 100%, no-money down mortgage loan backed by the U.S. Department of Agriculture (USDA) with reduced mortgage insurance premiums, and below-market mortgage rates. In Michigan, the USDA loan is widely-available. 97 percent of the geographic United States is in USDA loan-eligible territory.
USDA mortgage rates are discounted as compared to rates with other low-downpayment loans. You are required to take a fixed rate loan. ARMs aren’t available via the USDA rural loan program.
Rural loans can be used by first-time buyers and repeat home buyers alike.
The RD loan allows a person to borrow up to 102% of the appraised value of the home.
The Rural Development loan can also include closing costs, prepaid/escrow items and the RD guarantee fee. The maximum loan amount cannot include repairs and or improvements to the property.
USDA mortgage rates are often competitive among FHA mortgage rates, VA mortgage rates, and conventional loan mortgage rates — especially when buyers are making a small or minimum downpayment.
The current USDA mortgage insurance rates are:
- For purchases, 1.00% upfront fee paid at closing, based on the loan size
- For refinances, 1.00% upfront fee paid at closing, based on the loan size
- For all loans, 0.35% annual fee, based on the remaining principal balance
USDA upfront mortgage insurance is not paid as cash. It’s added to your loan balance for you.